IA-CEPA – A win for business

Key points:

  • IA-CEPA will create new opportunities for Australian businesses in one of the largest and most dynamic economies in the world.
  • The agreement will lock-in market access for Australian agricultural products and other goods, ensuring 99 per cent of goods exports can enter Indonesia duty free or under significantly improved arrangements.
  • Education, vocational training, tourism, health, manufacturing and aged care are among the service sectors expected to benefit
  • Establishing a stronger investment presence in Indonesia will also be a key to success

(Updated 10 February 2020, Melbourne) Asialink Business, Australia’s National Centre for Asia Capability, welcomes the approval of the Indonesia-Australia Comprehensive Economic Partnership Agreement (IA-CEPA) by the Indonesian parliament on 6 February 2020, following the Agreement's ratification by Australia in late 2019. We look forward to the IA-CEPA's entry into force this year.  

With Indonesia on track to become the 5th largest economy globally by 2030, this comprehensive agreement signals a new chapter in Australia’s dynamic relationship with our 13th largest trading partner.

The agreement will help ensure 99 per cent of Australia’s goods exports enter Indonesia duty free or under significantly improved arrangements. Vocational education providers will also benefit from a package of skills development outcomes, including skills training programs and work and holiday arrangements.  Other key service providers - including mining services, ICT, tourism, health and age care, education, and financial and legal services – are also among the sectors set to benefit. The agreement also contains new e-commerce outcomes to facilitate and protect trade in the digital age.

Asialink Business CEO, Mukund Narayanamurti, says the IA-CEPA has potential to deliver strong benefits to businesses and communities in both countries, while deepening our economic cooperation with one of the largest and most dynamic economies in the world.

“Australian exporters of highly-traded goods like beef and sheep products, grains, citrus and in areas such as steel, copper and plastics are set to benefit. New wins in industries like education, training, tourism and health are also particularly exciting for Australian providers,” Narayanamurti says.

“Australia’s education sector, for example, is set to gain long term benefits in the region. The agreement automatically locks in future liberalisation for Australian universities setting up in Indonesia. In vocational education and training (VET), Indonesia has also offered a number of commitments that will enable Australian providers to establish majority Australian-owned joint ventures in Indonesia with no restrictions on where they can operate. ”

Other dynamic opportunities to strengthen business collaboration are also opening up in innovation-led areas such as digital health.

Yet the long-term success of the agreement will depend on strengthening and diversifying Australia’s investment presence in Indonesia, as well as Australian business’ ‘on the ground’ understanding. 

“To translate these opportunities into success, many Australian organisations will need to develop a deeper understanding of Indonesia’s diverse market place and business culture, along with the skills and capabilities needed to develop effective partnerships,” Narayanamurti says.

President of the Australia Indonesia Business Council, Phil Turtle agrees the agreement will present new opportunities for businesses in both countries.

“The IA-CEPA will serve as an important ‘head-turner’, challenging perceptions and compelling our business leaders to place greater attention on opportunities with Indonesia...This will enable Australia and Indonesia to be true partners in many ways, striving for the joint economic prosperity of both countries,” he says.

The IA-CEPA is now expected to enter into force in early 2020.

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Practical resources for Australian organisations doing business in Indonesia are available - here

The Department of Foreign Affairs and Trade, IA-CEPA ‘The Key outcomes for Australia’ can be viewed - here